China Aluminum Semi Exports Muted but Anti-Dumping Cases Continue

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With a buoyant domestic market for aluminum extrusions and punitive export taxes on most profiles, you would not expect to see China in export markets, but while they have been conspicuous by their absence in Europe, they still appear to be very active in Southeast Asia. So much so that Australian producer Capral has asked the Australian Customs and Border Protection Service to investigate if an anti-dumping duty is appropriate. A decision will not be taken before April.  However, in the meantime, a 16 percent import duty is being applied to Chinese aluminum extrusions. China takes about a third of the 155,000-ton Australian market. Capral takes another third and the rest are assorted suppliers.

Australia’s action follows on the heels of Canada’s anti-dumping and countervailing duties applied in March of this year that, combined, came to be between 2 and over 100 percent, depending on the size and grade. As global trade has fallen, so have China’s aluminum exports, by some 36.6 percent in the first nine months of this year, to 950,000 metric tons. In the spring, India slapped duty rates of 21 percent on flat rolled products and 35 percent on foil products following complaints by state owned National Aluminum Co. and Vedanta’s Bharat Aluminum Co., according to a report in Bloomberg. Rates were subsequently adjusted to 14 percent and 30 percent, respectively, in June.

It has to be said that with a primary aluminum price in China some 17-20 percent more than the world price due to domestic VAT rates of 17 percent (plus a fluctuating SHFE premium over LME prices), and then suffering an export duty of either 5 percent for bar products under 2.6 diameter and 15 percent for bar products over 2.6 diameter, it is hard to see how the extrusion mills are exporting at a profit. Not that profitability comes into it. Anti-dumping requires proof of material harm to the domestic producers, which with extruders around the world unable to fill capacity, is not hard to prove.

Although construction and automotive are both showing substantial growth in China to the tune of 17.7 percent in construction and 32 percent in automotive over the first three quarters of 2009 compared to a year earlier, extrusion presses are still not running at capacity. If stimulus measures were to be eased and production drops back, the industry would have a severe excess of capacity and then we should expect the export taxes to be withdrawn to stop extruders closing down. For the sake of extruders in Europe and North America, let’s hope the domestic China market keeps rolling and the global market remains in some semblance of order.

–Stuart Burns

Comments (4)

  1. Joe says:

    In 2003 when we began our wholesale screening business Capral had the market advantage.
    Being a patriotic soul I continued with Capral until they were backordering (without notice) more than they were delivering. My clients were dying and so was the Building industry.
    When we aproached John (who is now working for the chineese) He shrugged his shoulders and didnt care.Then like manner from heaven the chineese committed to supply. and we built more houses than ever with reasonably priced windows and doors. So now Capral, who don’t want to compete equally in the world market, intend to blackmail us into buying their product with no service.
    The australin homeowner cannot afford the additional material cost or the extended lead times.
    How do they intend to meet another 60% demand when they cant service the customers they have.
    Capral has made its bed in Australia and must now be made to sleep in it.
    Capral… Dry your eyes and man up.
    Try competeing for bussiness like the rest of us have to.

  2. John says:

    Joe doesn’t realise that Capral is not the only Australian Extruder involved in this case. It was just that it was quicker for Capral to lead the case as they were prepared to “stand up and be counted” in the interests of fair trade!

    In fact all but Inex are supporters and helpers, along with major distributors who are disturbed by the aggressively low pricing by dumped and subsidised products.

    The fact is Joe that people like you find it easier to take cheap shots at others, without having all the facts, at the same time being willing to buy product that is unfairly subsidised and sold at a loss for export.

    Use of terms such as “blackmail” and “man up” have little place in a serious discussion about unfair World trade practices.

    The fact is that Australia is the third largest destination for Chinese extrusions – 65,000 tonnes in 2008 compared with 127,000 tonnes to US; It’s not because of higher domestic prices in Australia compared with US and Canada but because we have an open market with low tariffs and no chance to fight back, especially with China’s import tariffs (28%) and import taxes on top.

    You will one day thank your lucky stars for this action by the Australian Extruders (not just Capral), and recognise that at last a group of companies have stood up and proven that Chinese low prices reflect the effects of unfair dumping and subsidies.

    There are 8 Australian extruders offering to help you Joe, so maybe its time for you to consider shopping at home. Capral currently has more than 9000 customers so they must be doing something right!

  3. Kevin says:

    John you are correct that there are more extruders in Australia. They are however a captive market. They offer no distribution service which is what is required in this vast land of ours.

    The importers lead by Alspec have set up distribution businesses in Australia and have had to compete with Capral at a distribution level. The other extruders do not have the capacity to supply the over flow, without excessive leadtimes and with excessive lead times it becomes easier to push your price up.

    Capral have over the past 10 years done a very good job at damaging it’s customers businesses. Poor quality and poor service has seen customers look for alternatives. As I mentioned before the major distribution businesses in Australian Aluminium are Capral, Alspec and Ullrich. We know about Capral, Alspec and Ullrich import the bulk of their extrusion and use Capral for short lead time product. Ullrich have recently installed an extrusion press into Australia so they no longer have to rely on Capral. If the threat from China was as severe as Capral would have us believe then why would Ullrich invest in an extrusion plant? Inex are not supporting the action because they run a sound business offering competetive prices quality material and good service.

    Capral has lost focus on what it really is, it is an aluminium extrusion business with a distribution arm. Why does an Australian manufacturing business, with the largest extrusion plant in the southern hemisphere up in Queensland have a corporate head office in the middle of Sydney?

    If a positive determination is made and Chinese mills are forced to close down because they would no longer be competitive you can expect that prices for local product will go up, lead times for local products will go up and this can only have a negative effect on the Australian economy.

    Or you can be clever like Alspec and support this action while sourcing extrusions from Malaysia, Indonesia or Thailand.

  4. john says:

    We will be closing 3 smelters in the u.s. by jan 2016 due to Chinas dumping of primary aluminum on the world markets. We need tarriffs and we need them now.There dumpimg metal at a loss to close down other countries smelters so they will have the whole pie .Wheres the W.T.O. when you need them

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